Impact of new act on SAMRO's non-royalty revenue

The Non-Royalty Revenue (NRR) is income that SAMRO derives from interest earned on cash held while awaiting distribution, from surplus on disbursement of investments (in other words profit when the company disposes of any of its assets including shares) as well as from administration fees earned by the organisation in the course of providing administrative support to its subsidiaries. NRR has, until the coming into effect of the Companies Act, been distributed at the beginning of December every year to both members and affiliated societies.

Until 1 May 2011, SAMRO was a Company Limited by Guarantee, a corporate form that emanates from the 1926 Companies Act and was allowed to continue in the subsequent Companies Acts of 1965 and 1973. However, the new Companies Act of 2008 specifically does not allow the 'Companies Limited by Guarantee' corporate form to continue. Such companies were required to elect either to become a 'profit company' or a 'non-profit company'.

Distribution of NNR will be illegal

On 20 May 2011, SAMRO held an Extraordinary General Meeting (EGM) of members with a view to getting members to elect to become a for-profit company or non-profit company. To make this election, a special resolution voted for by at least 75% of the votes cast had to be passed. None of the proposed resolutions received the required minimum of 75% of the votes cast, thus rendering SAMRO a non-profit company (NPC) by default.

NRR does not fall within the exception created by the Act where in those specific instances non-profit companies may distribute income. It will therefore be illegal for SAMRO to distribute NRR to its members as a non-profit company. Given the fact that this Act is new, and given the possibility of differing interpretations of the exceptions created in Schedule 1 of the Act, the SAMRO Board took a decision to seek a declaratory order from the courts of law. Until the order has been given, the payment of NRR has been suspended.

In order to ensure that SAMRO members are kept informed at all times, SAMRO has created a dedicated call centre line with extended operating hours. The call centre will operate from 7am to 12am on weekdays, 8am to 5pm on Saturdays and 8am to 12pm on Sundays. To talk to a consultant during these hours call 0800 247 247 or send a "please call me" to 079 269 3417 and a SAMRO representative will call you back.